Pattern Identification and Industry-Specialist Auditors

Posted: 15 Sep 2005

See all articles by Jacqueline S. Hammersley

Jacqueline S. Hammersley

University of Georgia - J.M. Tull School of Accounting


Complex financial-statement misstatements that are difficult to diagnose are likely to be described by multiple cues that appear innocuous individually, but that together form an ominous pattern. Because individual auditors are likely to obtain only some of the cues forming the pattern, it is important to understand how well auditors interpret incomplete cue patterns. In this paper, I experimentally examine whether industry-specialist auditors develop problem representations about a seeded misstatement to facilitate interpretation of incomplete patterns. Overall, I find that matched specialists (i.e., those working in their industry) are able to interpret and fill in partial cue patterns, whereas mismatched specialists do not recognize the implications of even full patterns. Matched specialists respond to a partial cue pattern that potentially indicates misstatement by developing more complete problem representations about the seeded misstatement, assessing higher risk of misstatement, and suggesting procedures that will be efficient and effective at discriminating the presence of the seeded misstatement. Despite higher assessments of misstatement risk when receiving a partial cue pattern, mismatched specialists' problem representations are impoverished and suggested procedures do not indicate a focus on the seeded misstatement.

Keywords: auditor knowledge, industry specialization, pattern recognition, problem representations

JEL Classification: M49

Suggested Citation

Hammersley, Jacqueline S., Pattern Identification and Industry-Specialist Auditors. Accounting Review, March 2006, Available at SSRN:

Jacqueline S. Hammersley (Contact Author)

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

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